Wednesday, December 23, 2015

AMAZON KNOCK-OFFS: A SUCCESS STORY


I want to share a feel-good success story, but first a little background. 

Success Selling Online


The new economy has enabled mom-and-pop shops that have created their own unique stuff to sell it anywhere in the world very easily. Online retail has stripped away the capital-intensive barriers to selling unique products to everyone. Today, if you come up with a clever little gadget that solves a long-felt, common problem, then you too can market that product to practically everyone in the world almost instantly with very little effort. Everyone might not buy your product, but you can pretty easily get it in front of them.

And sometimes everyone does buy it. Sometimes you end up with a minor hit on your hands and all of a sudden, your basement side-project turns out to be a lucrative business. You are an overnight success. But success breeds imitation. If you come up with a clever little gadget that is easy to make and that becomes successful online, guess what: Other people want to steal your success.

It's an all-too-common story. Small company comes up with a really cool new gadget, starts selling online, becomes successful, and bam! There they are. Knock-offs. All over the place. Amazon's great marketplace for launching small businesses turns into a bazaar of cheap imitations from foreign companies just trying to steal the success of hard-working mom-and-pops. Why come up with your own neat new product? Just wait until someone else does the hard work and then knock it off. Easy money, right?

Amazon Knock-Offs


So now let's talk about Amazon.com. Amazon has done a great job of developing a platform that enables anyone in the world to go from online zero to hero in ten minutes or less. Anyone, anywhere in the world with a product to sell can start selling that product using Amazon's online marketplace in literally about ten minutes. That's a double-edged sword for our mom-and-pop sellers. Although it allows them to sell their cool new gadget with very little capital outlay, it also allows the knock-off artists to do the same.

So when your cool new product starts selling really well, and the knock-offs start showing up (as they inevitably will), Amazon's position is that's your problem. There are countless stories of Amazon selling knock-offs on its marketplace. Amazon's position is always the same: If you have a problem with knock-offs on its marketplace, contact the sellers. Don't bother Amazon, it's not their problem. Sure, Amazon pretends to care by recently putting up an online infringement reporting system. But Amazon doesn't take that system seriously. Why should they? As the law currently stands, Amazon is immune from responsibility for any of the products it sells on its own marketplace. That's right, Amazon doesn't care because they law says they don't have to care.

Not surprisingly, we represent quite a few companies in precisely this position. Their cool product became an online success, and then the knock-offs started showing up on Amazon. We even had a jury trial a couple months ago trying to hold Amazon's feet to the fire for this very problem. We're still fighting the good fight and hopefully, as Judge Martinez alluded to, the law will soon catch up with technology. But in the meantime, what can you do?

Fixing The Problem


Now on to the success story. There was a small company based in Texas that developed a really neat and cool household-goods product several years ago. It is the quintessential “why didn't I think of that” type of gadget. Very simple; very cool; very popular. So this company began selling them online using Amazon's marketplace. Overnight success. We're talking sales in the low millions of dollars very quickly.

So what happened next? Of course, the knock-offs showed up about a year ago. The company's sales fell off quickly to less than half what they had been. These knock offs were costing this mom-and-pop success story lots of money. These good folks were extremely frustrated because they thought they had done all the right things. They had secured patent protection for the product, both utility and design patents. They had secured federal trademark protection for their brand. Yet there they were: knock-offs. This company had spent over $80,000 to protect their product yet nothing they did could stem the tide of the knock-offs.

Out of utter frustration, the owner of this company had learned of us from our Milo & Gabby case, which has gotten some attention. She contacted me and asked if there was anything we could do to help. She was reluctant to spend even more money on lawyers after already dolling out more than $80,000 already. We spoke, and I suggested she wait and see if the efforts those other lawyers were putting forward would do anything. We promised to touch base in about two weeks.

Well about one week later, she called me back. She said that they were losing too much money every day to wait any longer. She asked if there was anything I could do that her other lawyers hadn't already done. I told her that we probably had a little more relevant experience with the problem given all we've learned over the last several years fighting this problem. She reluctantly agreed to let me take a shot at trying to help her out.

To prevent revealing client secrets, I can't provide too much detail about how we approached the problem. But what I can share is this. She paid me about $800 to work my magic, and about four days later all the knock off listings had been taken down. Literally overnight, all of them came down.

To say she was happy would be an understatement. I asked her, at the end of those four days, if they had seen any improvement in sales. I kid you not, she told me that their sales had literally doubled overnight. At the end of four days, the company's sales were already back to where they had been at their peak.

I tell this story because I firmly believe a lawyer's job is to help the client make money. If the client isn't making more money with your service than without it, you aren't doing your job. Typically, you can't draw a direct correlation between the lawyer's service and the client's success. Most often, the theory is that the lawyer's service is bearing fruit down the road. You can't see the immediate financial benefit, but a good lawyer at least hopes it's really there. So a story like this makes me very happy. I have never before represented a client for whom there was such an immediate and direct financial benefit. Bottom line, this client paid me about $800 to try and fix their problem. I did what I do, and my service to the client literally paid for itself in less than one day. That makes me feel good.

So there you have it. This feels like my own success story because I helped my client realize an immediate financial benefit that drastically exceeded the cost of my service. In my opinion, that is supposed to be every lawyer's highest ambition.

If your company is feeling the pinch of foreign knock-offs hobbling your sales, contact us and let's talk about whether we can repeat this success story.